BUSINESS STUDIES PROJECT

MADE BY ANANT AGARWAL XI E

• INTRODUCTION AND MEANING

•IMPORTANCE OF CONTROLLING

•LIMITATIONS OF CONTROLLING

•PROCESS OF CONTROLLING

Controlling is a very important managerial function. It is concerned with

taking necessary measures or preventive actions(i.e., setting up standards;

measuring of performance,etc) to ensure achievement of organisational goal

It is a comparison of actual performance with the planned performance. If

there is any difference or deviation then finding the reasons for such deviation

and corrective measures are taken to prevent or stop the reasons in future to

reduce the deviation and improve the performance.

IMPORTANCE OF

CONTROLLING

HELPS IN ACHIEVING ORGANISATION GOAL

JUDGING OF ACUURACY OF STANDARDS

MAKING EFFICIENT USE OF RESOURCES

IMPROVING EMPLOYEE

MOTIVATION

ENSURE ORDER AND DISCIPLINE

FACILITATE COORDINATION IN

ACTION

HELPS IN IMPROVING THE PERFORMANCE

HELPS IN MINIMISING

ERRORS

• Helps in achieving organisational goals:

When the plans are made in the organisation these are directed towards achievement of

organisational goal and the controlling function ensures that all activities in the organisation

take place according to plan and if there is any deviation, timely action is taken to bring back

the activities on the path of planning. When all the activities are going according to plan then

automatically these will direct towards achievement of organisational goal.

• Judging accuracy of standards:

Through strategic controlling we can easily judge whether the standard or target set are

accurate or not. An accurate control system revises standards from time to time to match

them with the environmental changes.

• Making efficient use of resources:

Each activity is performed according to predetermined standards. As a result there is most and effective use of resources.

• Improving employee motivation:

An effective control system communicates the goals and standards of appraisal for employees to subordinates well in advance.

A good control system also guides employees to come out from their problems. This free communication and care motives the employees to give better performance.

• Ensures order and discipline:

Control creates and atmosphere of order and discipline in the organisation. Effective controlling system keeps the subordibates under check over dishonesty and fraud of employees.

• Facilitate coordination in action:

Control helps to maintain equilibrium between means and ends. All the departments are

controlled according to predetermined standards which are well coordinated with one

another. Control provides unity of direction.

• Controlling helps in improving the performance of the employees:

Controlling insists on continuous check on the employees and control helps in creating an

atmosphere of order and discipline.

There are two measures which can be exercised on employees’ performance:

a) Self appraisal report.

b) Performance appraisal report by supervisors.

LIMITATIONS OF CONROLLING

DIFFICULTY IN SETTING QUANTITATIVE

STANDARDS

Eg: human behavior, job satisfaction

NO CONTROL ON EXTERNAL FACTORS

Eg: government policy , technological

changes

RESISTANCE FROM EMPLOYEES

COSTLY AFFAIR

• Setting up standards:

Standards means target or the yardstick against which the actual performance is measured.

The standards are the basis for comparing performance and hence, must be achievable

and should be set up keeping in mind the resources of organisation and must be

numerical or in measurable terms.

• Measuring of performance:

After setting up of standards the performance of the employees is measured by

evaluating the actual work done by the employees.

When the performance can be measured numerically then it is very convenient to

measure the performance.

While measuring the performance the quantitative as well as qualitative aspect of

performance is kept in mind.

Sometimes employees achieve the quantitative standards by ignoring qualitative

standards.

Generally the performance of the managers is measured by looking at the overall

efficiency level of the organisation.

Eg: the performance of research and development department is measured by change in

technology and updation of production department. The performance should be meaured

periodically in short period of time.

• Compare performance against standards:

After measuring of performance the manager compares the actual performance with the

planned performance and standard.

If there is match in both then the controlling function end there only. But if there is mismatch or deviation then the manager tries to find out the extent of deviation.

If the deviation is minor then it should be ignored otherwise timely actions must be taken.

• Analysing deviations:

All deviations need not to be brought to the notice of top management. A range of deviations should be established and only cases beyond this range should be brought to the knowledge of top level mangament.

These deviations should be classified as one’s which are to be attended urgently and the others which can be ignored or are not to significant.

Two ways to control these are:

1. Critical point control

2. Management by exception

CONTROLLING DEVATIONS

CRITICAL POINT CONTROL

MANAGEMENT BY EXCEPTION

1. Critical point control:

It means keeping focus on some key areas and if there is any deviation in these key areas,

then it must be attended urgently. Key areas are those which have impact on whole

organisation.

Eg: if there is increase in production cost by Rs. 5 per unit and there is increase in postal

cost by Rs. 20, then more focus should be to find out reasons for increase in cost of

production as it will affect the profit and future revenue of organisation whereas postal

cost is incurred rarely and managers have no control over postal cost.

2. Management by exception:

It means the manager who tries to control every thing may end up controlling nothing. The

deviations which are beyond the specific range should only be handled by managers

and minor deviations can be ignored. Manager should not waste his time and energy in

finding solutions for minor deviations rather he should concentrate on removing

deviations of high degree.

Advantages of Management by exception are:

I. It saves time and efforts of managers.

II. It focuses attention of managers on significant matters.

III. No wastage of time and energy of managers to solve routine problems. These are

solved by subordinates.

IV. It differentiates between critical and simple problems.

• Taking corrective measures:

On comparing the actual performance with the planned performance, the managers will

come to know about the deviations between the plan and actual performance.

The next step is to remove these deviations and bring back things on track i.e., according to

plan.

Taking corrective measures involves:

I. Let the situation remain same if the deviations are minor.

II. Redesign the plans if these are overstated or not matching with the present day

business environment.

III. Taking corrective measures to improve the performance so that in the future it

matches with the plan.